Correlation Between Century Synthetic and Binhthuan Agriculture
Can any of the company-specific risk be diversified away by investing in both Century Synthetic and Binhthuan Agriculture at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Century Synthetic and Binhthuan Agriculture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Synthetic Fiber and Binhthuan Agriculture Services, you can compare the effects of market volatilities on Century Synthetic and Binhthuan Agriculture and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Century Synthetic with a short position of Binhthuan Agriculture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Synthetic and Binhthuan Agriculture.
Diversification Opportunities for Century Synthetic and Binhthuan Agriculture
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Century and Binhthuan is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Century Synthetic Fiber and Binhthuan Agriculture Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Binhthuan Agriculture and Century Synthetic is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Century Synthetic Fiber are associated (or correlated) with Binhthuan Agriculture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Binhthuan Agriculture has no effect on the direction of Century Synthetic i.e., Century Synthetic and Binhthuan Agriculture go up and down completely randomly.
Pair Corralation between Century Synthetic and Binhthuan Agriculture
Assuming the 90 days trading horizon Century Synthetic is expected to generate 97.09 times less return on investment than Binhthuan Agriculture. But when comparing it to its historical volatility, Century Synthetic Fiber is 5.55 times less risky than Binhthuan Agriculture. It trades about 0.02 of its potential returns per unit of risk. Binhthuan Agriculture Services is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 392,000 in Binhthuan Agriculture Services on September 25, 2024 and sell it today you would earn a total of 98,000 from holding Binhthuan Agriculture Services or generate 25.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Century Synthetic Fiber vs. Binhthuan Agriculture Services
Performance |
Timeline |
Century Synthetic Fiber |
Binhthuan Agriculture |
Century Synthetic and Binhthuan Agriculture Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Century Synthetic and Binhthuan Agriculture
The main advantage of trading using opposite Century Synthetic and Binhthuan Agriculture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Synthetic position performs unexpectedly, Binhthuan Agriculture can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Binhthuan Agriculture will offset losses from the drop in Binhthuan Agriculture's long position.Century Synthetic vs. Military Insurance Corp | Century Synthetic vs. Investment and Industrial | Century Synthetic vs. Hoang Huy Investment | Century Synthetic vs. Hochiminh City Metal |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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